October 5, 2014

Decried as puritanical, hypocritical, or simply absurd, sports gambling regulations in the U.S. are among the strictest in the world. Under the Professional and Amateur Sports Protection Act (PASPA) of 1992, also known as the Bradley Act, state-sanctioned sports gambling is prohibited in all U.S. states except for the ones that had operated betting schemes at any time between 1976 and 1990. This explains why a fan can legally place a bet nowadays only in Delaware, Montana, Nevada, and Oregon. Throwing an extra legal spanner in the works, the federal government even banned online gambling, under the aptly named Unlawful Internet Gambling Enforcement Act of 2006. But to the satisfaction of frustrated gamblers everywhere, all that could soon change.

On October 6, a federal district judge is expected to rule on New Jersey Governor Chris Christie’s request to allow his states casinos and racetracks to offer sports betting. This isn’t Christie’s first stab at relaxing gambling regulations. The last time the governor took on PASPA, in 2012, he was challenged in a lower court by the federal government and the NCAA, NFL, NBA, NHL, and the MLB, who won. This time around, though, Christie is seeking to circumvent federal interference by arguing that the Bradley Act merely forbids a state from profiting from gambling: If a state were simply to decriminalize gambling, without extending any regulatory oversight over operators and without taxing casinos, it wouldn’t be in breach of federal law. In other words, sports gambling should be legal but only if the state doesn’t get a cut of the profits. Christie's creative interpretation of PASPA didn’t stop the major sports leagues from filing a motion (again) against his request.

Christie has found support in many corners. "Ultimately, don't think for a second that the leagues, the states or the federal government care about the morality of our gambling addictions. They care about money. When gambling is profitable to these entities and interest groups, it's legal. When someone else is making the profits, it's magically illegal," argued CNN legal analyst Danny Cevallos. In The Atlantic, Hampton Stevens wrote, "Gambling, or 'gaming' as proponents prefer, may not be as emotionally charged as gay rights or drug prohibition, but its increasing legality nevertheless is part of the much larger shift in American culture."

Even David Stern, the former NBA commissioner, said that “gambling is good,” while his successor, Adam Silver, acknowledged that sports betting was “inevitable” and that “if people are watching a game and clicking to bet on their smartphones, which is what people are doing in the UK right now, then it’s much more likely you’re going to stay tuned for a long time.”

Sports betting is a $1 trillion industry globally, with more bets being placed daily than stocks traded on the New York Stock Exchange. Why should the U.S. be left on the sidelines while the rest of the world profits? Making betting legal in America would reduce the black market and could even stimulate economic activity.

But we know what problems arise when sports gambling is legalized. We need only look across the pond, where football scandals happen almost as often as goals.

The current case for gambling, framed in progressive terms and emphasizing economic benefits, misses the underlying issue with mass sports betting. Betting should stay illegal not because it poses a dangerous moral hazard to individuals but because it leads to a marked increase in match-fixing. The scale of sports corruption even prompted the head of Europol to issue a stark warning last year: “Match fixing is a significant threat to football... involving a broad community of actors. Illegal profits are being made that threaten the very fabric of the game." Just ask Declan Hill, a gambling guru, who has described the corruption associated with match-fixing as a “tsunami” that has wrecked most Asian soccer leagues and is now perverting its European counterparts.

Indeed, according to a study conducted this year by the Sorbonne University in Paris, gambling has been identified as “the primary purpose for match fixing.” Since the evolution of betting regulations hasn’t kept up with technological advances and globalization, authorities everywhere are often ill-equipped to deal with the related issues of money laundering and corruption plaguing the world sports industry.

In the last decade alone, European soccer, where sports betting is legal and widespread, has seen an unprecedented number of match-fixing scandals, involving referees, club presidents, players, and league official. A Europol investigation that went public in 2013 found that more than 680 matches across the world, including a Champions League game that ended in a draw, were fixed, with criminals raking in more than $11 million in profits. The entire operation was run by Singaporean Wilson Raj Perumal, who built a transnational crime empire from his one-bedroom flat in the shadow of Wembley Stadium in London. He created an organization in which crooked referees and money-seduced players would make sure that the match swung the “fixer’s” way, while accomplices would place bets on the Internet or by phone in Asia.

Contrary to Adam Silver’s claim that legalizing betting will help the development of sport, quite the opposite has happened in Europe. In countries such as Greece and Italy, football attendance has been steadily decreasing, as diehard fans are growing disillusioned with the quality of the game. According to the London School of Economics, match fixing leads to even more match fixing: lower attendance reduces the revenues of football clubs, which in turn prompts an increase in match fixing in order to pay wages. In Greece, for example, attendance has fallen by more than half in the last seven years. While the collapse of the Greek economy played a role, the decline in attendance is part of a much wider trend of match-fixing scandals, a 2009 study by the International Association of Sports Economics concluded.

Indeed, according to George Quraishi of Howler Magazine, “the corruption in Greek soccer is a little different from the typical match-fixing arrangements described by Interpol in February 2013. It's more institutionalized,” making it easier to observe but harder to wipe out. In Greece, the primary beneficiaries are not gamblers halfway across the world but powerful businessmen-cum-club owners like Olympiacos's Evangelos Marinakis. As part of the ongoing Koriopolis scandal—which involves over 80 suspects, ranging from league presidents to referees, who have used their power to line their own pockets—Marinakis is accused of securing favorable playing conditions for his team by using threats, violence, and bribes. Perhaps not coincidentally, his team has won 15 out of the last 17 titles.

Morality, as Cevallos pointed out, has nothing to do with the illegality of sports betting. And the debate shouldn’t focus on whether the state has the right to regulate individual behavior, but whether the state safeguards the basic principle behind sports: fair play. Current U.S. law does exactly that.

A U.S. scandal provides a lesson worth remembering. In 1920, “Shoeless Joe” Jackson, the greatest natural hitter the game had ever seen, and seven other players admitted to throwing the 1919 World Series to the Cincinnati Reds in exchange for $10,000, paid by a group of gamblers who had bet against the Chicago White Sox. The Black Sox scandal destroyed the careers of the players involved, as they were all banned from baseball. As he was leaving the courthouse, a kid came up to Shoeless Joe and with hopeful eyes asked, “Say it ain’t so, Joe.” To which the disgraced legend replied, “Yes kid, I’m afraid it is.”

The Black Sox scandal was a long time ago, but a useful reminder that an America with legal sports gambling would not be immune to match fixing. Because when market rules replace sports rules, and when gambling odds become the standard unit of measurement for the quality of a game and its players, the game itself changes: It becomes not about who wins on the field, but who wins off of it.